An investigation of performance and productivity in petroleum retailing in Malaysia

Abstract

ABSTRACT The petroleum retailing industry in Malaysia has long been established since after World War two. The business environment of petroleum retailing industry is very much difficult with issues such as eroding real margins and rising costs that impact on the industry. The Malaysian petroleum retailing industry is a regulated industry and operating costs have been increasing for time to time. The automatic pricing mechanism was established in 1983 and the margins which were set by the government have never changed. However, the industry has grown and the market continues to be very competitive. The operators or dealers of service stations are required to do something in the market in order to survive in the industry. There are many factors can influencing the performance and/or productivity in this industry. The owners or managers should have to know and identify the external and internal environments which can dictate or affect their operations. Based on the external and internal environmental factors, two groups 0f variables were chosen from both factors to investigate the effect and impact of these factors on the industry. The study was conducted in two phases. In the first phase of the study, the researcher analyzed the common problems areas and the techniques used to approach these problems by service station owners and managers. With the initial stage completed, the researchers utilized this information in attempting to identify a methodology for analyzing performance and productivity of service stations. In the second phase of the study, the survey with structured questionnaire was done in southern part Of Peninsular Malaysia. The results of this research, mainly based on the study of the performance and productivity show that both internal (in this study represented by owner/manager and store characteristics) and external (represented by location and competitive characteristics) environmental variables played the significant roles in performance and productivity of service stations in Malaysia. Interestingly, while both internal and external environmental variables are significantly related to performance, only internal environmental variables can predict the productivity. In other words, internal environmental variables are better predictors of performance than productivity by service stations in this industry. Beside that, the study also found. that there is a differences between owner and manager regarding performance and productivity. As a conclusion, the researcher suggested that both measurement should be considered when any study need to be done on any industries especially in business and retailing in the future.